Why You Shouldn’t Drop Out of School to Start a Company

August 25, 2014

The image of a young, unstoppable founder is certainly appealing -- cultivated in movies like “The Social Network” and through press-friendly initiatives like the Thiel 20 Under 20, there’s plenty in popular culture to suggest that the essential ingredients of entrepreneurship are little more than youth and a healthy dose of determination.

This narrative is appealing – after all, dropping out of college to make millions of dollars sounds like a pretty great proposition – but as we discovered, the data paint a starkly different picture. Leveraging funding data from the popular investment tracking platform Crunchbase, the LinkedIn Data team applied state-of-the-art machine learning technology to analyze the demographics and relationships of more than 1,200 tech entrepreneurs whose companies successfully raised a round of venture capital funding in 2013. Below are a few highlights from the research:

A Strong Foundation

First and foremost, building from a strong educational foundation is a smart bet. The majority of these VC-backed entrepreneurs list a college education on their LinkedIn profile, with nearly 30% having attended top-tier universities such as Stanford, MIT or Harvard.

But education is not the only foundational piece. Leaders of venture-backed startups also tend to have experience at large, highly-capitalized technology firms – with more than 30% of individuals having work experience at companies with a market cap above $50 billion. What’s more, these men and women tend to develop leadership experience before founding a company, with more than 40% holding positions at the director level or above prior to their current role. Another commonality is the serial entrepreneur, with 20% having founded at least one company before their current VC-backed startup.

Finally, we find that age matters, but not in the way many assume. The data show a significant increase in the size of the first-round investment as entrepreneurs enter their thirties and that increase holds steady as age increases.

Data-Driven Career Tips for Aspiring Entrepreneurs

For the men and women interested in starting a company, the path to success is rarely straightforward. But this analysis sheds light on the popularized image of a young, unstoppable founder and replaces it with the educated, experienced business leader. If you are interested in starting your own company, here are a few lessons to take away: